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Abolishing IMD Exclusion Will Put Teeth in the War on Opioid Addiction

By Louis Josephson, Ph.D.November 09, 2017

Since the 1960s, U.S. hospitals and healthcare facilities that provide more than 16 beds for the care of people with psychiatric and addiction issues have been known in legislative terms as Institutions for Mental Disease (IMD). Today, this designation has come to represent a significant barrier for Medicaid enrollees who suffer from psychiatric and drug-related issues. This is due to the little known and largely outdated “IMD exclusion,” which is a federal law that blocks Medicaid from making payments (in most cases) to facilities that qualify as IMDs.

The original intent of the IMD exclusion—to ensure the nation’s largely state-run psychiatric hospitals would not receive federal dollars—had its logic. Back then people spent months, years, and often their entire lives in these institutions. But over the many decades that have ensued, society and healthcare have changed in significant ways. This includes recognition of the real need for short-term inpatient hospitalization and treatment of people with significant psychiatric and addiction disorders.

The good news is that people across the nation—including policy makers and elected officials—are waking up to the IMD issue, and real energy finally seems to be building to do something about it.

Here in Vermont, Governor Phil Scott issued a statement applauding the president’s recent declaration calling the opioid epidemic a “public health emergency.” He also indicated his support for a 50-state Medicaid IMD waiver for inpatient psychiatric and addiction services. In so doing, Governor Scott has added his voice to a public discussion of the IMD problem that is finally taking place at the highest levels of government.

Ideally, congress and the president would pass a law to repeal the IMD. Short of that, the president could issue a 50-state waiver, as suggested by Governor Scott. This would unlock a tremendous inventory of dedicated psychiatric and addiction treatment resources that are currently unavailable to hundreds of thousands of Americans.

Today, Vermont is one of several states operating under a temporary IMD waiver. Our waiver will end in 2020, and it’s clear that by then we will have reached a crossroad. Without a waiver extension, my hospital, the Brattleboro Retreat, will simply have to consider closing units. The same will be true of the Vermont Psychiatric Care Hospital in Berlin along with similar facilities across the nation. This is why every state will need a more permanent fix if we are to succeed in turning around a mental health and addiction crisis that many acknowledge will take years to address.

The price of inaction on the IMD exclusion is almost too much to calculate. In human terms alone we’re already losing about 175 people a day nationally to opioid overdoses. In Vermont, opioid related fatalities have risen every year since 2014. And without access to appropriate treatment facilities, Medicaid enrollees will continue to turn in increasing numbers to expensive hospital emergency departments for help with acute psychiatric and drug problems.

The Congressional Budget Office has estimated that overturning the IMD exclusion would cost the nation an extra $40--$60 billion over the next ten years. I would argue that this is a sound and necessary investment. Just consider how much more it will cost in terms of declining health, inefficient use of valuable healthcare resources, rising crime rates, and most important, lives cut short.

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The Brattleboro Retreat is a private, not-for-profit, specialty hospital offering comprehensive services designed to meet the mental health and addiction treatment needs of children, adolescents, and adults from all walks of life.